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Price pooling for coal supplies by year-end: Ahluwalia

Posted on Nov 07, 06:42PM | IANS

Planning Commission Deputy Chairman Montek Singh Ahluwalia Wednesday said the price-pooling mechanism should be adopted for fuel supply to power firms.

"We must move to system of price pooling for fuel," Ahluwalia said addressing a conference here on regaining momentum in the power sector organised by the India Energy Forum.

The Planning Commission has suggested that state miner Coal India Ltd (CIL) should adopt a pooling formula on prices by combining rates of imported and domestic coal to offset high import costs.

He said efforts for price pooling are underway. "I am told it would be done by the end of this year," Ahluwalia said.

He pointed out that natural gas resources are beset by the same price pooling problem but the "gas market is much more fragmented than oil and coal".

"The problem with gas price pooling is that gas also goes to fertiliser... I don't think that in the next 3-4 years these issues can be solved."

The CIL board had earlier approved the modified fuel supply agreement (FSA) without price-pooling with 65 per cent domestic coal and 15 per cent imported coal at cost-plus basis.

CIL had earlier said: "Price pooling is a mechanism to implement FSA... If price pooling is approved then 15 per cent supply of imported coal will be not in the cost-plus method, but in pooling mechanism".

On the other major issue in the power sector - transmission - and India's unprecedented grid collapse this summer on account of states overdrawing power, Ahluwalia advocated legal powers for enforcing grid discipline.

"To disconnect a state is not simple... we need to give people statutory powers to disconnect load," he said.

"Currently the Regional Load Despatch Centres only send sms to State Load Despatch Centres (to warn of overload) .... unless they have legal powers they would be unable to protect grid functioning," Ahluwalia added.